Simply Money

Episode Transcript

Speaker 1 (00:07):
Tonight, while the US China trade deal has us shaking
our heads. A hint, it has nothing to do with
the deal itself. You're listening to Simply Money, presented by
all Worth Financial. I'm Bob sponseller along with Steve Ruby. Steve.
When markets are dropping, the financial headlines make it seem
like the sky is literally falling. So when the US

(00:29):
and China announced some progress on a trade deal that
sent the market soaring upward yesterday, one would think that
the headlines would turn positive, right wrong, And that's what
has us a little bit fired up today.

Speaker 2 (00:43):
Yeah. I get a lot of joy out of picking
apart and tearing apart headlines, I would say, because a
lot of it is just so full of it. You know,
these headlines, remember if it bleeds, it reads. The noisy
stuff gets the attention. People keep clicking, reading, listening, watching, sharing.
So you know, some of these headlines that we're going

(01:06):
to talk about today are doing exactly that. So headline one,
the stock market is cheering, and the cheering the US
China trade deal. But the damage is done. So this
is an opinion piece from MarketWatch. You know, the author
says it, ultimately, any any trade deal that that the
US and China negotiate is likely to be fragile, sure,

(01:27):
limited scope, vulnerable to collapse. Businesses and investors should thus
be prepared for continued disruptions across global supply chains.

Speaker 1 (01:36):
The damage is done, Steve. Last time I checked, as
of the close yesterday, the S and P five hundred
is now above the level it was on Liberation Day
way back on April seventh, when when these tariffs were announced.
What are you talking about damage?

Speaker 2 (01:53):
I thought, we're down twenty percent, you know, that's what
it makes it sound like. And it's mind boggling to
me that these opinion pieces are allowed to actually make
it to the surface for people to read, because it
makes it seem like we're still we should still be panicking.
We should have panicked. We need to panic. Things are terrible,
the sky is falling. Everything is wrong. That's what happens

(02:13):
when you read some of these articles that are noisy,
to put it lightly.

Speaker 1 (02:17):
Well, Meanwhile, the most recent CPI number came out, you know,
this morning, and it's the lowest year over year CPI
number two point three percent since twenty twenty one. That's
good news. Yeah, I wonderful here. I wonder if we're
hearing that in the headlines today. No, I mean i'd
be seen.

Speaker 2 (02:33):
That's the battle the FED has been fighting for a
long time with what they've done with interest rates. And yes,
it takes some time for what they've done to come
to fruition. But here we are. The numbers came out.
They're good. Headline number two, cooling US China trade tensions
don't mean smooth sailing for the economy. Not quite as noisy,
but if you read it, you know it gets into
some annoying details that I think again are just stirring

(02:57):
the pot and fanning the flames and trying to maybe
make you act against your own best interest based on
what you could argue is somewhat artificial noise. Yes, some
of this in the short term feels awful. Yes, we
did hit correction territory for a few minutes earlier this
year when when the markets fell from February highs down

(03:17):
twenty percent and the news flip. Yes, volatility is a
normal part of the markets. This is making it sound
like the sky is falling and you should act and
that's what bothers me.

Speaker 1 (03:26):
Well, and we're not saying that the market's going to
go straight up from here, you know, twenty thirty percent
and never go down again. That's not the point. The
point is, there are always going to be headwinds out there.
There's always going to be things to worry about, whether
it be inflation or you know, interest rates, or geopolitical concerns,
there's all. If you're looking for fear and looking for

(03:48):
reasons not to be invested, you'll always be able to
find them. Meanwhile, life goes on, Capitalism goes on, People
find a way. The markets are resilient, the American people
are resilient, and I think the last six weeks is
case in point of that.

Speaker 2 (04:04):
Absolutely. I mean, and you know, if Liberation Day scared
you off, hopefully it's a lesson to learn from because
you know, ultimately we are back, you know, up from
the volatility that was caused from that.

Speaker 1 (04:19):
Well, we don't want to just show focus on the
short term. I mean, the important thing here is to
focus on your long term plan. And here's what I mean.
If you just take a look at the S and
P five hundred twenty years ago, and you had a
million dollars invested twenty years ago, that million dollars, if
you just left it alone, left it in there, and

(04:40):
left it alone. It's worth seven million dollars today over
a twenty year period. However, if you just missed the
best ten days, your million dollars would be worth about
three point three million dollars. You've given up over half
the return over a twenty year period by trying to
time the market and missed the best ten days along

(05:01):
the way.

Speaker 2 (05:01):
This is why if you have an advisor and you
call them and you ask to move the cash, they're
going to do the best they can to help you.
Understand why that is a terrible idea. It's because these
best days you speak of they happen during market volatility.
Because volatility isn't just down, it's up. It's both directions.
So parking your money in cash and waiting for volatility

(05:24):
to stop is never a good idea unless you have
a crystal ball and you can time it precisely, right
before things drop and right before they go back.

Speaker 1 (05:32):
I didn't see one of those sitting on your desk
when I came in this morning.

Speaker 2 (05:36):
I bought one, you know, once, and it didn't work.

Speaker 1 (05:40):
You're listening to simply money presented by all with financial
I'm Bob Sponseller along with Steve Ruby. Steve talk about
why these negative headlines are so problematic for ordinary investors
out there.

Speaker 2 (05:52):
Financial planning doesn't just focus on the short term. It
focuses on the long term ultimately. Financial media right, well,
I'm talking about funny ancil. Planners want you to make sure.
They want to make sure that you're living the life
that you want to today and maintaining that long term
plan to and through retirement. The media doesn't care about that.
It's a short term focus. They thrive on daily volatility,

(06:13):
not long term trends, because the noise is what gets
the most attention.

Speaker 1 (06:18):
Words like crash, collapse, melt down, chaos, these are all
words that we've seen thrown around quite a bit in
recent weeks. And again here we are. You know as
of today, if you'd have just gone away on a
long trip, you know, on April first, and come back yesterday,
you'd come back and say, well, what what volatility? What happened?

Speaker 2 (06:42):
Yeah, it's a beautiful thing. I mean I try to
coach people to look at their investment returns maybe once
the year, twice a year, that the chances are that
if you look at your investment returns less often that
you're going to see positive numbers, green numbers. You look
every day, the markets are up marginally more than they

(07:03):
are down when you make that comparison, if you look
every day, we're wired as human beings to notice those
those scary, terrible things that are interface. You know. Now, now,
now you're gonna feel that you're gonna notice it more
and more. So, not looking at the short term is
a major win. If you can do that, you're going

(07:25):
to see more green numbers than red numbers.

Speaker 1 (07:27):
Yeah, Steve to me, and I'd love to get your
perspective on this. All these constant negative headlines, what they
do is they undermine investor confidence. You know, being exposed
to this constant negativity, it can erode trust in the
market itself. It can erode trust in the American economy.
It could lead to paralysis in decision making, and then

(07:50):
people miss out on these great long term returns that
they get by being patient and staying fully invested.

Speaker 2 (07:57):
That's why it's important to work with the fiduciary financial
advice that has your best interest front and center, somebody
that can talk you off the ledge for making bad decisions,
missing out on those best days that we talked about
that can have an impact on the longevity of your money.
You know, I've explained this before. One of the reasons
why I do the show is because when I started
in the industry, it was in a four to one
K customer service role and it was a little frustrating

(08:20):
not having any securities licenses or letters after my name,
because in that customer service role, somebody reaches you, you
just have to help them with what they wanted. They're stated,
there's stated neither one thing or two things, and.

Speaker 1 (08:32):
You're a paid order taker.

Speaker 2 (08:33):
Yeah, and and some it was I've moved on work, Yeah,
thank you, thank you, I've moved on Since then, this
was this is a you know, over ten years ago
at this point, and it was frustrating because people would
call in and they'd say, Man, I saw something on
the news or I read an article and I'm terrified,
So I want to move all of my money in
my four o one K to cash and I want
to stop contributing. And I'd have to say, oh, great,

(08:55):
you reach the right place. I'm happy to help you
with that today. Anything else, Yeah, it was terrible. Every
single time. It was like a punch in the gut.
You know, I wasn't in that role for very long
before I got some licenses that I could at least ask,
why are you sure has anything in your financial plan changed?
What did you read? Why is this a concern for you?

(09:17):
You know that that turned those those fearful moments into
a little bit of introspection where people were like, oh, yeah,
maybe this is just short term and I don't need
to act. Maybe I should just let my money do
what it's going to do, which is grow over the
long term.

Speaker 1 (09:31):
Yeah, and those those powerful why questions, you know, along
with great historical context on how the markets work. You
never hear about any of that stuff on the nightly
news and in the financial media. It's not talked about
because it's not nearly as exciting as short term volatility.
That's what everyone wants to talk about.

Speaker 2 (09:51):
Yeah, do nothing is way less excited than exciting than
the sky is falling. Run for the hills act, you
know it really is. That's why we talk about this,
because you know, you see these noisy headlines. Make sure
that you're thinking about how the decisions you make in
the short term may impact your long term.

Speaker 1 (10:09):
Here's the all Worth advice. There is always going to
be a reason to worry about something. Unfortunately, the media
knows this and their whole model is based on that.
So avoid the noise and stick to your long term plan.
Coming up next, what is the best long term investment
out there? You know what we think, Here's what a

(10:30):
thousand of you think. Coming up next. You're listening to
Simply Money, presented by all Worth Financial on fifty five KRC,
the talk station. You're listening to Simply Money presented by
all Worth Financial. I'm Bob sponseller along with Steve Ruby.
If you can't listen to Simply Money live every night,

(10:52):
subscribe to our daily podcast. You can search Simply Money
on the iHeart app or wherever you find your podcast.
As coming up at six forty three, are you making
the right decisions with volatile markets right now? We're going
to find out when we play Investment Factor fiction. Coming
up at a little bit all right, Steve, We've talked

(11:13):
about that history suggests that the stock market is the
best place to invest long term dollars because the stock
market has had the best performance compared to inflation of
any other asset class. But apparently some just don't want
to believe us.

Speaker 2 (11:29):
Yeah, it continues to surprise me when these surveys come out.
This is a new poll. Four in ten surveyed US
adults actually view real estate as the best investment for
the long haul. This is from Gallup, So you know
this is this is a polling agency that carries some
water here. And you know this is roughly unchanged from

(11:51):
about this time last year. Thousand people surveyed to come
up with these figures.

Speaker 1 (11:56):
And that four and en that four and ten number
really hasn't changed, you know from a year ago. Why
do you think people are so feeling so biased and comfortable.

Speaker 2 (12:06):
Towards real Volatility in the stock market is a big one.
Volatility is huge. Two and ten said gold was the best.
To in ten gold was the best. That's actually five
points higher than last year. Coming in third is actually
the first place. Stocks and mutual funds, which less than
to and ten picks as the best long term investment.

(12:28):
Boggles my mind. Thirteen percent of Americans think that savings
accounts or CDs are the best for long term returns.
Come on CDs, short term event those are literally short
term investments. You're not going to get the best long
term returns from something that is designed for the short term.
It's it's impossible.

Speaker 1 (12:48):
And then to finish out that survey, five percent thinks
bonds is the best place to invest money, and then
four percent prefer cryptocurrency. And these numbers are all in
line with the same survey that was done about a
year ago. The interesting thing to me, Steve, is when
this survey was done. It was conducted among a thousand
people during the two week period between April first and

(13:11):
April fourteenth of this year, right in the middle of
all this tariff talk. You know, craziness that we experienced.

Speaker 2 (13:19):
That that's amazing, It really is, isn't it That this
is the timing of the poll. Of course the results
are going to be a little bit skewed, but you know,
real estate didn't change four and ten. You know, he
ask why it's more alluring gold and real estate for
that matter. When you have a house, when you're on gold,
you can you can hold it, you can see it,
you can feel it, you can touch it. It's a
real thing. Stocks don't exactly feel real. I would say

(13:42):
it's any numbers on paper unless you hold the stock certificates.
Even then they're more boring because they're not shiny and
you can't.

Speaker 1 (13:49):
Live in it like a house. Well, in, your house
doesn't get priced every day. It's not showing up on
an online investment statement. You don't see the minute by
minute volatility of the value of your house or any
you know, a condo, or any any other piece of
real estate for that matter. So I think I think
the point is people aren't looking at the price of
it every day. They'refore they're more comfortable.

Speaker 2 (14:10):
Well, I mean it's recency bias too, because you know,
there's been high demand for buyers accelerating prices of homes.
Medium home sale. Medium home sale price was four hundred
and three thousand dollars in March, down from the record
high in June of last year of almost four hundred
and thirty thousand dollars. So again recency bias. Home prices

(14:30):
have been spiking, whereas during the period of this particular
pull it was smack dab in the middle of recent
volatility in stocks.

Speaker 1 (14:40):
Well, and meanwhile, gold's been on quite a run here recently.
You know, folks have piled into that as a hedge
against inflation and a hedge against all little stock markets.
So you know, I can understand why people you know,
always have recency bias and they have tended to think
more favorably you know about gold in recent in recent weeks.

Speaker 2 (15:01):
Sure, I mean shiny need to own it. That's all right.

Speaker 1 (15:04):
You're listening Simply Money presented by all Worth Financial umbob
sponseller along with Steve Ruby. So Steve, let's talk about
the best long term asset class stocks.

Speaker 2 (15:14):
Again, no surprise, this is what we've talked about for years,
because it is true. You know that that's all there
is to it. I have a chart when people come
into my office and they're carrying a fancy binder packet
that looks like it costs three hundred dollars to make,
and it's marketing material for you to buy gold. Yes,
gold has done well as of late. But if you

(15:36):
pull up a chart that looks at short term cash
positions like CDs versus gold, versus treasuries versus bonds versus
stocks over the history of the markets, the stocks are
going to absolutely blow everything else of the water out
of the water as far as returns are concerned. Annualize
return of the s and P five hundred, which again

(15:56):
this is just the largest five hundred companies in the
US ten point nine percent over the last thirty year
period ending in April.

Speaker 1 (16:03):
That's average annualized return.

Speaker 2 (16:05):
That's right over the last thirty years. Over the same timeframe,
real estate eight point seven eight, gold seven point three eight,
even lower.

Speaker 1 (16:14):
So what we're saying here, Steve, we're not saying don't
own any gold, don't own any real estate, don't own
any CDs. Why not have the best of all worlds
and build a truly diversified portfolio where you have exposure
to all of these asset classes and it tends to
smooth out volatility, give you some nice cash flow in

(16:37):
the way of dividends and interest and works real well
over the long term.

Speaker 2 (16:42):
Yeah, and that's what having a financial plan helps you do.
When you have a financial plan, you understand the risk
you need to take, the risk you can afford to take,
and obviously your comfort level with taking risk is a
different subject but needs to be considered as well. So
having the best of all worlds, I mean for real estate,
instead of buying multiple properties, it's not something all of
us need to do. You could explore things like rets,

(17:03):
real estate investment trusts. You know that that gives you
exposure to the returns of the real estate market without
actually having to own a multi family unit that's being
rented out.

Speaker 1 (17:16):
Yeah, and my only caution with reads is somebody who's
been you know, in this industry for over thirty years,
you got to watch out with these things because a
lot of these reats, especially the non traded rates, come
with very high commissions, a lot of illiquidities, and a
lot of folks want to sell you these because they
make commissions to sell them. So make sure if you

(17:36):
dip yourself into the reed space, you're doing it with
a good fiduciary that can explain the pros and cons
of these things and make sure they're not locking up
your money with high fees and surrender charges.

Speaker 2 (17:48):
Yeah, I mean, you can do that through an ETF
or a mutual fund even you know, you know, you know,
something that is publicly traded, not non publicly traded, where
you could run into some of those issues. Same with gold.
Instead of actually stopping stocking up on coins or bullion yourself,
you know, gold ets that gives you exposure to commodities
with having liquidity and not having to worry about some
of the interesting tax situations. By actually owning gold, you know,

(18:11):
you don't have to find a place to store it,
hide it, you know, whatever you might want to do,
you know, not not need to be worried about the
stress of it getting stolen or losing it, things like that.

Speaker 1 (18:24):
Here's the all Worth advice. There is nothing wrong with
having a little bit of real estate or gold in
your portfolio. But remember history shows that the stock market
provides the best returns of all over the long term.
The long term coming up next, the talk many aren't
having with their parents but should be having. You're listening

(18:45):
to Simply Money, presented by all Worth Financial on fifty
five KRC the talk station. You're listening to Simply Money
presented by all Worth Financial. I'm Bob sponseller along with
Steve all Right, Steve, let's talk about something that makes
most people literally squirm, and that's talking to your age

(19:07):
and aging parents about money. It's uncomfortable, it can be awkward,
and most of us just want to avoid it until
there's an actual crisis. But tonight we want to talk
about that and hopefully change that behavior.

Speaker 2 (19:22):
Yeah, I mean, a big part of financial planning is
open communication, whether that's between you and your spouse, loved ones,
children or aging parents. Because this goes beyond dollars and cents.
It's it's when when we're talking about the parents, it's
it's not just making sure they're protected, it's making sure
their wishes are honored. And nobody is scrambling in the

(19:44):
dark during some kind of an emergency, but actually starting
the conversation. Uh, that's the hard part. A lot of
us avoid it because maybe we feel guilt, fear. We
don't want to seem noisy. We don't want to nosy. Yeah,
thank you, thank you and noisy nosy whatever. You know,
we don't want to offend our parents. Deep down, we

(20:06):
don't want, you know, to face the fact that our
parents are aging. It's a scary thought. But you know,
the deal is waiting too long can can make a
hard situation even harder.

Speaker 1 (20:17):
Yeah, and Steve, I had a meeting with a client
last week where this topic came up. And this is
somebody that I've worked with for over thirty years, and
this gentleman is now in his late eighties and I've
just noticed in the last couple of years, not severe,
but enough memory issues and slight cognitive decline to the

(20:37):
point where I had to bring it up and say, hey,
I think it's time to bring your power of attorney,
who happens to be one of his sons, into these
meetings going forward, because I want to make sure that
this person is not subject to elder abuse or other
you know, frauds or scams out there. And it was
a it was a difficult decision for me to bring

(20:58):
up because of my long term relationship with this gentleman,
but as a fiduciary advisor, you know, it's our job
to look out for that. Thankfully, the conversation went really well.
But let's talk about what happens for folks that don't
have an advisor and it's just family trying to figure
this out. What are some of the pitfalls of allowing
these type of situations to go unaddressed and fester for

(21:22):
a bit too long.

Speaker 2 (21:23):
I mean, it can be terrible, It really can. There's
a lot at stake. If you know, do your parents
have a will, who's the power of attorney? If you
know they're not able to make decisions, what kind of
plan do they have for long term care? Where is
the paperwork even stored that that exists, that spells this
stuff out. And it's not just about the legal documents.
It could be little things like, I mean, how do

(21:45):
you pay the water bill if somebody has suddenly hospitalized?
What bank do your parents use? What insurance policies do
they have. Believe me, you don't want to come into
a situation where there's a crisis that you're dealing with
in the now and you have to worry about finding
and locating these documents. It just adds stress to an

(22:06):
already stressful situation.

Speaker 1 (22:08):
Yeah, especially when you know this stuff rears its head.
Unfortunately during a crisis period, you know, the parent had
to go to the hospital for whatever reason, and things
get complicated, and now you're worried about your your parents'
health at two o'clock in the morning, and then on
top of that, you got to scurry around and look
for documents, passwords, you know, all that stuff just to

(22:31):
take care of normal, you know, operating business. And that's
why we got to get out in front of this
as we can and steve what I find and I'm
sure you do too, and talking to your clients. These
are difficult conversations because the financial dynamics among parents and kids,
and not all kids are the same. Either. It can

(22:52):
be a little delicate because the kids don't want to
be perceived as too nosy or noisy or sticking their
nose where it doesn't belong, and you know, the parents
are uncomfortable sometimes realizing that these are discussions that need
to be had. So timing is literally everything here in
looking at broaching the subject.

Speaker 2 (23:13):
So you're saying, don't make it a Thanksgiving dinner topic
in front of the whole family. I think I think
that'd be terrible. I mean, you got to try quieter time.
You know, maybe if you're taking your folks to a
medical appointment or something, or a news story brings up
finances or a state planning, show them this show how
about that?

Speaker 1 (23:32):
Well in a way to bring that up, you know,
a subtle way. You could say something like this, you know, Mom,
I know these aren't easy topics, but I just want
to make sure we are all prepared for your sake
and ours if something unexpected ever happens. You know, pretty
open ended way of broaching the subject and then just
see where the conversation goes from there.

Speaker 2 (23:53):
Yeah, you're not in that situation. You're not asking, hey,
hey ma, how much money do you have, you know,
it's not that's not how you want to approach these
It's a big difference when it's you know, making sure
that we're all prepared and if they're open to it,
offering to help them get their thoughts organized.

Speaker 1 (24:12):
You're listening to simply Money presented by all Worth Financial.
I'm Bob sponseller along with Steve Ruby. Steve, let's go
through some things to talk about when the subject comes up.
And let's say all parties are amenable to beginning this
process of discussing their plans, putting transition contingencies in place.

Speaker 2 (24:32):
What are the things that we need to cover. I
mean estate planning documents as front and center. When I
begin a relationship with the folks you know, professionally in
financial planning, I always tell them, you know, part of
financial planning is a state planning, and I'll bug the
crap out of them until they actually do it or
they tell me to shut up about it, which everyone
comes first, because not getting this stuff in order can

(24:54):
be catastrophic, So that the first thing to talk about,
I would argue, is the state planning documents, will, living will, attorney,
healthcare directive, trust documents regarding healthcare. Do they want aggressive
treatment or some kind of comfort care? If something were
to happen, end of life, long term care? What's the
plan if they can't live independently? What does that look like?

(25:15):
And that includes things like insurance policies, whether it is
long term care afterwards would be life insurance, financial accounts?
Where are they who can access them, household bills? You know,
how to make sure they're paid, Who can step in
and manage them if they're if needed. I mean, there's
a lot to cover here. I wouldn't slam that in

(25:36):
their face, you know, right up front. This is kind
of a step by step, and I would say starting
with those estate planning documents because that includes decisions to
be made in life, like the healthcare directive for example.

Speaker 1 (25:49):
Here's the all Worth advice. These conversations are never easy,
but they are if handled correctly, they are acts of love.
They protect your parents, they protect you, and they give
your entire family peace of mind. Coming up next, we
test your knowledge of this current economic environment with a
little factor fiction. You're listening to Simply Money, presented by

(26:11):
Allworth Financial on fifty five KRC. The talk station. You're
listening to Simply Money, presented by Allworth Financial. I'm Bob
sponsorer along with Steve Ruby. You have a financial question
you'd like for us to answer, There's a red button
you can click right there on the iHeart app while

(26:33):
you're listening to the to the show. Simply record your
question and it will come straight to us. Coming up
straight ahead, we are going to discuss the danger of
running out to buy a car due to terrif fears.
All right, are you making the right decision with volatile
markets right now? Let's play everyone's favorite game, investment, factor fiction,

(26:58):
and we will find out. Uh, Steve, let's start off
with you factor fiction. With global economic conditions uncertain and
the potential for US dollar fluctuations, it makes sense to
make sure your portfolio includes exposure to foreign markets. Oh,
factor fiction.

Speaker 2 (27:18):
This is an easy one fact. I mean, a diversified
portfolio is going to have international, domestic stocks, bonds, short
term position.

Speaker 1 (27:26):
I wanted to make sure to give you the easy question.

Speaker 2 (27:28):
This is a lay up here. I mean this I
didn't want I didn't want to make you look bad
on the radio. Thank you, Thank you. I appreciate that.
You know it's it's this year is a good example,
because during the recent volatility, international markets are up, bonds
were up. It was the domestic stock market that was down.
So having that diversified exposure to foreign markets was very

(27:50):
helpful as of late, and it is over the long term.
And you know, part of the frust having a diversified mix,
I will admit people do struggle with U sometimes is
the fact that international markets are not always going to
outperform domestic markets.

Speaker 1 (28:06):
Well, when the when the European Central Bank cuts rates
seven times this year, that's gonna help your stock market.
And developed in international stocks are up almost fourteen percent,
you know, year to date as of last Friday, Steve.

Speaker 2 (28:19):
Yeah, and they've lagged behind for quite some time until recently.
So you know, there's there's a resource I pull up
from time to time. It's the asset allocation quilt. It
is a very busy picture, but it shows all the
different subasset classes that exist. A small cap, big cap,
large cap breeds you know, a different different exposure to

(28:40):
aspects of the markets. And you'll see some of them
that are way towards the top of good returns and
way towards the bottom in the next year, and then
in the middle so when you have a diversified mix,
you're not always gonna have winners. You're gonna have losers sometimes,
and making sure that you have exposure to all aspects
of the market is a fantastic idea to smooth out
volid utility over the long term. So yeah, fact, easy one.

Speaker 1 (29:04):
Fact or fiction.

Speaker 2 (29:05):
In twenty twenty five, tax increases are inevitable, so selling
stocks now and locking in gains is the safest move.
Here's an easy one for you too.

Speaker 1 (29:14):
This is fiction. I mean it it remains to be
seen if tax increases are inevitable. We'll leave that one
alone for now. But you know, this reminds me of
one of my favorite investment sayings. Don't let the tax
tail wag the dog. You don't want to make a big,
rash decision to lock in gains because you think tax

(29:35):
rates might go up. I mean, even if they do
go up, they're going to go up by a little bit.
And you never want to make, you know, investment allocation
decisions based on tax rates, because selling out of stocks
and going to cash and waiting until another day. I mean,
we just talked about this. You missed the best ten
days in the market over a twenty year period, your

(29:58):
total return drops by more than in half. So you
do not want to be doing this.

Speaker 2 (30:03):
No, you don't. So making decisions about the unknown uh
not the best recommendation. And this is a good example
of that because we don't know if tax increases are
coming down the pipeline right now.

Speaker 1 (30:14):
All right, Steve. When we talk about volatility, it's not
just when markets go down.

Speaker 2 (30:20):
Yeah, I mean, we talked about this today already. It's
it's a fact. So yeah, let me answer the question. First. Fact,
this is, thank you, indeed true. But we talked about
it already because you know, you think volatility, you think
scary down, you think uh markets tumbling, But vot volatile
markets means quick up and downs. It's bumpier. Remember the markets.

(30:43):
As Nathan Backrach used to say, and I've I've stolen
over the years, is it's like a drunk guy walking
up the stairs while playing with a yo yo, And
that yo yo represents that that short term volatility, the
drunk guy walking up the stairs might have as stumbles
up and down, but over the long term he'll get
up there eventually. Violet latility can absolutely go up and down.
That that will always hold true. So that's an argument

(31:06):
as to why not sell to cash because the best
days happen during periods of oftentimes extreme volatility.

Speaker 1 (31:14):
Yeah, the old fear and greed. You know, fear and
greed are real emotions that people experience and to go
with recency bias, so definite fact there.

Speaker 2 (31:24):
Yeah, it's interesting too because you know, sometimes folks will
you know, the markets are going on a tear and
they've been rather conservative for many years, and they're like,
all right, do you think I should move to something
more aggressive now? Yeah, waiting until everything gets more expensive?
Interesting how that works?

Speaker 1 (31:40):
Right? For sure? All right, Steve, investing in real estate
is a guaranteed win, even in a cooling market factor fiction.

Speaker 2 (31:50):
Hopefully you were listening to our segments earlier today. Fiction.
Of course, it's not a guaranteed win. I mean, investing
in real estate cannot be guaranteed win. There's the liquidity,
there's taxes, there's the fact that prices in the real
estate market do fluctuate in and of themselves. Yes, inventories
have been low, so prices have been spiking. But you're

(32:13):
not going to guarantee yourself a win just because you're
putting everything into real estate.

Speaker 1 (32:18):
All right, how about this one, Steve. Dollar cost averaging
cushions the emotional impact of investment volatility factor fiction.

Speaker 2 (32:26):
Oh absolutely, fact, So dollar cost averaging, you know, rather
than putting in a lumpsum, Let's say you have one
hundred thousand dollars to invest with for some reason, do
you put it all in at once? Yeah, I'm abe
time in the market typically beats market timing, but dollar
cost averaging enables you to put in a set amount
over a set period of time. So maybe you'll do,

(32:47):
you know, twenty five thousand dollars every quarter, you know,
ten thousand dollars a month for ten months. What happens
is is the markets are going to go up or
down during that period of time. The longer horizon, the
more likely it's going to be upmarket. So you're going
to buy into those investments while they're fluctuating, and sometimes
they're lower, so it drives down the average price per

(33:08):
share that you actually pay when you buy these investments.
So yeah, fact, I'm going to kick one to you.
Fact or fiction. Wall Street's fear gauge, or the VIX,
which we've talked about before, is the best indicator of
whether we will head into a recession.

Speaker 1 (33:26):
That is definitely fiction. And if you just look pull
up a chart of the VIX, you know, over the
last two months, you'll see exactly what I'm talking about.
I mean, the VIC spiked, you know, in early April
when the market's tanked in the short term, when these
tariffs came out, and the VIX has calmed down considerably
since then. Whether are we not, whether or not we
go into a recession, or we're in a recession, or

(33:48):
whatever you want to say. I mean, that's data driven
over a long period of time, and usually Steve, by
the time the media declares that we're in a quote
unquote recession, it's usually over it because this recession data,
it's always based on lagging rear view mirror data.

Speaker 2 (34:07):
Lagging indicators exactly.

Speaker 1 (34:09):
Whereas the VIX that's something people use to do very
short term trading, whether that's swing trading with stocks and
ets or option trading. So it's fiction. You know, the
VIX index is not indicative of whether or not we're
in a recession. Yep, coming up next. You think you're
getting a deal by buying a car before teriffs might hit,

(34:31):
think again, and we'll explain next. You're listening to Simply
Money presented by all Worth Financial on fifty five KARC,
the talk station. You are listening to Simply Money presented
by all Worth Financial. I'm Bob Sponsller along with Steve Ruby.
When Liberation Day came, you know, in early April, savvy

(34:54):
investors and others thankfully took a wait and see approach
and they did not act on motion. Others, however, decided
they needed to pull the trigger on major purchases before
terrists might take effect, and that has left some people
in trouble. Steve, I guess, in.

Speaker 2 (35:12):
Theory, it seems like a good idea at the time,
but I'm not so sure that's the way the cards
fell for this person we're going to talk about. I mean,
President Trump outlined the twenty five percent tariffs on auto imports.
Thousands of people raced to dealerships to snatch up I guess,
new models before the higher levies drove up prices projected

(35:34):
by thousands of dollars. We just read a story about
a retired school teacher in Texas who drove a twenty
twenty three volts Wagon. Voltswagon ran just fine, but when
the tariffs were renounced. Suddenly she felt the need for
a new car, so.

Speaker 1 (35:49):
She offloaded the VW And what did she buy Steve
a twenty twenty five BMW X three for about sixty
five grand with a twenty thousand dollars down payment, leaving
her with a five hundred dollars monthly car payment. And
she was quoted as saying, I was afraid of tariffs,

(36:11):
and I was afraid prices were gonna skyrocket. Then I
was like, maybe I jumped on this too soon. This
looks like lifestyle This looks like rationalizing lifestyle creep.

Speaker 2 (36:22):
Yeah, that's good way to look at it. Yeah, that
is you know, these tariffs are an excuse for me
to upgrade the vehicle that maybe I can't afford, whether
or not there are tariffs. You know, right now, the
average new car loan rate nine percent, so you know,
banks they've been extending slightly more loans to subprime buyers.

(36:43):
This is according to research from Cox Automotive. So at
the same time, prices unfortunately remaining stubbornly high. Average monthly
payments for new vehicle seven hundred and thirty four dollars
in March, up about twenty seven percent since early twenty twenty.

Speaker 1 (37:00):
Well, and I think the key point here in this case,
and I'm not passing judgment on this person. I don't know.

Speaker 2 (37:05):
Sounded like it a little bit, Maybe I am.

Speaker 1 (37:07):
But look, we have to presume that that twenty thousand
dollars down payment was the trade in value on a
twenty twenty three Volkswagen that was working and running just fine.
So I had a twenty thousand dollars vehicle completely paid off.
No reason to make a vehicle switch here, and certainly
not upgrade to a sixty five thousand dollars vehicle where

(37:28):
you've got this huge monthly payment.

Speaker 2 (37:30):
Yeah. Another issue here is that new car buyers, they
have been extending the length of their loans, with twenty
percent one in five taking out seven year notes for
car loans. Come on, that's you should not be doing that.
Five has been historically what it is one of the
upper limits. Four is what we would recommend. Unfortunately we
don't see a whole lot of that. But what happens

(37:52):
when you kick that loan out too far is you
can find yourself upside out in your loan as the
vehicle value drops below what you actually owe on it.

Speaker 1 (38:00):
Yeah, I mean getting out in front of you know,
tariffs or price hikes can be a prudent decision. I mean,
I heard the CEO of Ford Motor Company interviewed about
a week ago, and I correct me if I'm wrong,
but I think he announced employee pricing on all Ford
vehicles through the fourth of July. So there's really there's

(38:21):
plenty of inventory. There's no reason to go out and
make an irrational and irrational purchase. If you've got the
emergency fund or savings accounts set aside to buy a
new vehicle, that's the responsible way to go here, not
make an emotional purchase. Thanks for listening. Tune in tomorrow
we will talk about whether a quote unquote perfect portfolio exists.

(38:45):
You've been listening to Simply Money, presented by all Worth
Financial on fifty five KRC, the talk station